June 6, 2005

According to Strategy Analytics, despite a softer market, Motorola strengthened its position as the dominant handset manufacturer in North America during the first quarter of 2005.

Motorola's 34.2-percent market share during the quarter was almost double the 17.4 percent garnered by its closest competitor, LG Electronics, and nearly triple the 12.9-percent share posted by No. 4 Nokia Corp.

Strategy Analytics attributed Motorola's strong showing to its well-diversified portfolio-which includes CDMA, GSM and iDEN handsets-and a 15-percent increase in GSM handset sales compared with the first quarter of 2004, when it also led the industry with a 29.6-percent overall market share.

LG also posted strong sales gains for its GSM handsets as well as extended its leadership position in the challenging CDMA handset space due to its close relationship with Verizon Wireless and increasing exposure through Sprint Corp. LG was No. 4 during the first quarter of 2004 with 12-percent market share.

"The fragmented and ultra-competitive CDMA market does not afford any one vendor a lasting dominant share position, but LG's surging performance in GSM shows product and distribution balance is a precursor to leading competitive participation in the U.S. market," noted Chris Ambrosio, director of the wireless device strategies service at Strategy Analytics.

Samsung maintained its No. 3 position in North America and increased its total market share slightly from 16.6 percent during the first quarter of 2004 to 17.1 percent this year. David Kerr, vice president of Strategy Analytics wireless practice, noted Samsung's tepid growth was hampered by a lack of low-end devices, as the company continues to focus on mid- and high-end handsets.

Growth among the top three manufacturers appeared to come at the expense of Nokia, which saw its market share plunge from 20 percent during the first quarter of 2004 to 12.9 percent this year. Strategy Analytics attributed the drop to Nokia losing out in the GSM replacement market to Motorola, Samsung and LG. Nokia can take solace in its industry-leading 33.1-percent worldwide market share at the end of last year.

Kyocera Corp. also posted a year-over-year decline in North American market share, dropping from 8.4 percent in 2004 to 5.1 percent this year.

Strategy Analytics noted that the company, which produces only CDMA-based devices, has reached a critical transition point in its operations as it struggles between the much larger top four manufacturers and the also-rans. Kyocera recently announced plans to outsource handset manufacturing to China-based Flextronics International Ltd.

Those also-rans include Sanyo Corp., which has an exclusive arrangement with Sprint in the U.S. market and saw a slight market share increase from 3.4 percent in 2004 to 3.6 percent this year, and Audiovox Corp., which boosted its market share from 2.3 percent to 3.3 percent.

Strategy Analytics added that it expects possible consolidation among the smaller North American handset providers, including Panasonic, NEC and Siemens, which have found the market to be "hugely challenging." Siemens has already announced plans to spin off its handset business from its more profitable infrastructure operations.

Source: RCR News